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Packed with Potential

Evolving consumer eating habits and health concerns are paving the way for additional cheese category revenue streams.

By Rich Mitchell,

The prominent cheese sector is becoming an increasingly attractive market for added store brand activity. While cheese is a mainstay in most diets, increasing shopper interest in wellness and convenient eating is creating larger merchandising opportunities and a potential boost to the already vibrant private label sector.

Indeed, store brands account for about 42 percent of natural cheese sales, reports Information Resources Inc. (IRI), a Chicago-based market research firm, and cheese is a category that is ripe for enlargement, as natural cheeses are free from preservatives and artificial ingredients.

“More consumers are moving to natural because they are seeking products with minimal ingredients,” says Amanda Topper, a food analyst with global market research firm Mintel.

An August 2015 Mintel consumer survey found that 93 percent of respondents had eaten or purchased cheese in the previous three months — up from 92 percent a year earlier In addition, 90 percent of respondents had eaten natural cheese, while consumption of processed cheese fell from 74 percent to 72 percent.

“Consumers are looking for high quality, health benefits and transparency in labeling in cheese products,” states Terry Mitchell, senior sales director for DairiConcepts LP, Springfield, Mo. “Cheese is naturally suited to capitalize on these trends.”

React to changing consumption patterns

Cheese also is becoming more enticing to the growing base of shoppers who are seeking quick snacks or looking to replace meals by eating smaller amounts of food throughout the day, Topper says. Mintel reports that persons aged 25 to 44 are the most frequent buyers of cheese, as are Hispanic and white shoppers, households with higher incomes and those with children. Cheese in single-serve portions is particularly appealing to parents because the items are available in bulk packages and easy to dispense as snacks or lunch components.

“Many consumers that don’t have the time to eat traditional meals are consuming more snack items,” says Jim Clark, national sales manager for Old Fashioned Foods Inc., Mayville, Wis. “They are most popular with younger shoppers, and especially millennials.”

Dip into the wellness well

Retailers also could benefit by offering organic options, which many consumers say are worth the extra cost, along with non-dairy cheeses, Topper notes. The Mintel survey found that 26 percent of respondents agree that non-dairy cheese is more healthful than dairy-based products, and 45 percent say organic cheese is more healthful than other cheese options.

To enable store brands to better compete with the national offerings, meanwhile, Topper suggests that retailers display price comparisons between the products, offer a satisfaction guarantee with private label items, provide buy-one-get-one-free offers, and engage in in-store sampling. A wide variety of selections, including gourmet, premium, organic and non-dairy offerings, also will enable store brands to stand out.

In addition, retailers could spotlight and differentiate their store brands by offering cheeses in a variety of flavors and tastes, including spicier choices such as pepper jack, jalapeño and Buffalo wing, Clark says.

“More people want bold options, and it also is important to innovate with different package sizes so private label is not just a me-too brand,” he says.

But store brands also should mimic the popular national brand offerings because “if a product is a proven seller, it will also sell as a private label item,” Clark states.

Retailers could further benefit by studying the merchandising strategies of supermarkets with successful cheese programs, says Mark Braun, president and CEO of Nuestro Queso LLC, Rosemont, Ill.

“There is no one recipe that works, but it is beneficial to look at the stores that are really good at selling cheese,” he states. “Some have a core business of providing me-too products, and others are looking to differentiate or offer specialized selections. There are many factors that contribute to success.”

Such factors, he notes, can include marketing items in innovative packages, emphasizing products that appeal to the specific demands of local customer bases, offering wellness-oriented items such as selections that are free of rBST, and placing health claims on packages.

“Value is not predicated solely by cost,” Braun states. “The cheese ingredient standards being set by many of the largest retailers are extremely high.”

Provide a first-rate eating experience

Although attractive prices are important, quality should be the paramount concern, Topper says.

“Quality is not something that store brand shoppers are willing to sacrifice,” she notes.

Maintaining quality, however, can be challenging, particularly if a retailer uses a variety of suppliers for its private label selections, Mitchell adds.

“Retailers can ensure their private label products meet or exceed the national brand equivalent by selecting supplier partners based on the quality of their products,” Mitchell notes. “While pricing is obviously important, retailers need to remember if the pricing seems too good to be true, it probably is.”

To most effectively work with those suppliers, retailers should present their partners with a strategic operating plan for the products they intend to market 12 to 18 months later, says Kelly Huff, general manager and vice president of operations for Thermo Pac LLC, Stone Mountain, Ga.

Such plans should include the regions in which the products will launch and a backup proposal in case the initial launch is unsuccessful. The secondary plan, he states, could include a different region or cheese flavor.

“The retailer’s research and development and sales and marketing teams should collaborate with the supplier in the planning, Huff says. “The results from the first 30 to 60 days in a market will show if changes are needed.”

Do consider product development centered on organic and non-dairy cheese options.

Don’t forget to showcase own-brand cheese through in-store sampling and promotions.

Do consider adding trendy spicier flavors to the own-brand cheese assortment.

Don’t select store brand cheese suppliers solely on price — quality counts.

By Rich Mitchell,
Source: Store Brands, Stagnito Media

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